Shares of Trump Media, which owns the social media platform Truth Social, experienced a decline at the opening bell on Thursday. This drop occurred just hours before former President Donald Trump is expected to begin selling his nearly $2 billion stake in the company. The firm, trading as DJT on the Nasdaq, saw its shares fall by 5% at the market’s open.
Trump, the Republican presidential nominee, holds almost 57% of DJT’s outstanding shares. As of Thursday morning, this stake was valued at approximately $1.7 billion, constituting nearly half of Trump’s estimated net worth.
Trump and other early investors have so far been restricted from selling their shares due to a lockup agreement that took effect when the company went public following a merger with a blank-check firm in late March. These restrictions are anticipated to expire as of Thursday afternoon.
The company has acknowledged in regulatory filings that the end of the lockup could potentially lead to significant sales of its stock. Even the market perception of a sell-off could negatively impact DJT’s stock price. Despite this, Trump has stated he has no current plans to sell his stake, an assurance that temporarily boosted the stock’s price, although those gains were later reversed. However, other insiders may look to capitalize as soon as the opportunity arises.
Trump Media’s fortunes are closely linked to Trump himself, as his engagement with Truth Social is a significant draw for the platform. After an initial surge, the company’s stock has been in decline, coinciding with Trump’s contentious presidential campaign against Democratic nominee Kamala Harris. This downturn has reduced Trump Media’s market value, aligning it more closely with analyst estimates of its actual worth.
In its earnings reports, Trump Media disclosed a loss of around $344 million against revenues of less than $2 million in the first half of the year. The company’s revenue is entirely dependent on ad sales, with Truth Social attracting a much smaller user base compared to established social media platforms. Despite this, Trump Media maintains a market capitalization of approximately $3 billion, as some retail investors continue to back the company as a show of support for Trump or a bet on his political future.
Trump Media shares saw a significant rise following an assassination attempt on Trump at a campaign rally in July, though the stock began to decrease later that month as Kamala Harris replaced Joe Biden as the Democratic nominee, subsequently narrowing Trump’s lead in the polls. The stock saw another rise before the September 10 presidential debate, perceived as a potential risk for Harris. However, Trump’s poor performance in the debate contributed to a subsequent plummet in DJT shares, reaching their lowest level since the merger.
With the impending end of the lockup period, Trump Media has sought an injunction to prevent ARC Global, a sponsor of the merger that took the company public, from immediately selling its shares. However, a Florida judge has decided not to grant this injunction. Additionally, a Delaware judge ruled that Trump Media had breached an agreement with ARC and must allocate a larger share of its stock to the company.
This situation remains fluid, and further developments are expected.
